The U.S. Department of Justice has asked a federal judge to stop New York-based Lend America from issuing mortgages insured by the Federal Housing Administration (FHA).

The civil complaint seeking a court-ordered injunction was filed by Benton J. Campbell, U.S. attorney for the Eastern District of New York, on behalf of HUD, and alleges that Ideal Mortgage Bankers Ltd., also operating under the names Lend America and Lending Key, falsely certified that borrowers who received over $14 million in loans met FHA’s lending requirements.

HUD’s Mortgagee Review Board alleges 12 violations, including approving loans that did not meet minimum credit requirements, failing to adequately document income and closing funds, omitting liabilities from the underwriting analysis, and approving loans with ratios that exceeded HUD standards.

“Any FHA-approved lender that seeks to do business with us must follow our standards, it’s just that simple,” said FHA Commissioner David Stevens. “If we determine that our partners are not playing by the rules, they’ll cease being our partners.”

HUD also notified four of the lender’s underwriters that it was suspending and possibly proposing debarments for their actions in connection with these violations. The Justice Department is also considering imposing civil money penalties against the four underwriters.

Lend America, which recently announced the launch of an FHA correspondent program, is the nation’s 22nd largest FHA loan originator.

A Lend America spokesperson issued the following statement in response to Tuesday’s allegations: “The company was taken by surprise, expects to continue in business, and will respond more completely once all allegations are reviewed.”

The allegations against Lend America come just as the government’s mortgage insurance agency has come under fire for poor oversight of its sanctioned lenders.

An internal audit found that FHA, which now insures roughly 20 percent of the nation’s new home loans, was ill-equipped to quality-check prospective lenders and ensure compliance with its own standards. HUD’s auditors randomly reviewed 22 approved lender applications. Of those, only one contained all the required documentation.